Hematopoiesis has been extensively studied in many animal models, including mouse embryonic stem (ES) cells and murine embryos. However, analyses of human hematopoietic development typically utilize blood cells isolated from bone marrow or umbilical cord blood. While these post-natal human hematopoietic stem cells (HSCs) have been well characterized, considerably less is known about how these HSCs arise from earlier precursor cells during the initial stages of human development. Human ES cells provide an optimal starting point to study fundamental questions of human developmental biology, and to define phenotypic and genetic regulation of rare precursor cells. The overall goal of this proposal is to use human ES cells to systematically characterize human hematopoietic precursor cell development. We have previously demonstrated methods to derive CD34+, CD45+ and mature myeloid-lineage cells from human ES cells. More recently, we have also derived lymphocytes from CD34+ human ES cell-derived precursor cells. While we demonstrate an ordered development of hematopoietic cells derived from human ES cells, more complete understanding of the conditions required for hematopoiesis from human ES cells is still lacking. To better characterize fundamental cellular and molecular mechanisms of early human hematopoiesis, we will do the following. 1) Define soluble and cell bound proteins essential for development of blood cells from human ES cells, with particular emphasis on Wnt proteins. 2) Characterize the phenotype of human ES cell derived HSCs by in vitro surrogate assays and transplantation into immunodeficient mice. 3) Isolate clonal populations of hemangioblast or hemogenic endothelial cells that serve as a common precursor to both blood and endothelial cell lineages. Successful completion of these aims will significantly advance our ability to use human ES cells to understand basic human development, with important applications to better stem-cell based therapies. (These studies will use NIH registry WA01 and WA09 human ES cells). Relevance to public health: These studies will have important impact in the rapidly growing area of regenerative medicine. Better understanding of hematopoietic development from human ES cells will translate to novel source of cells for hematopoietic cell transplants used to treat a variety of malignant and non-malignant blood cell diseases. These cells may also be used as a new source for transfusion medicine. [unreadable] [unreadable] [unreadable]